“Gregory first clicked into a pair of skis a couple of weeks after finishing a final season as a University of Washington linebacker. He put off graduate school to help skiers onto lifts at Mammoth. “I was probably the most gregarious liftie on the mountain,” he says. Gregory befriended Mammoth owner Dave McCoy and was soon welding lift towers. Eventually he ran human resources and negotiated with investment bankers to sell the resort twice, most recently to Starwood Capital Group, a private equity firm. Now, with a 15 percent ownership stake, he lives at the Four Seasons Hotel Denver with his camper van parked out front. (It won’t fit in the hotel’s garage.)”
The above paragraph was written in a March 1 story titled “One Pass to Ski Them All” by Ryan Stock which appeared in Bloomberg News.
But that was only the story’s introduction to former Mammoth Mountain CEO (and now Alterra Resorts CEO) Rusty Gregory. Stock lays the mythmaking on even thicker in his closing paragraph:
“In mid-December, Gregory flew into Deer Valley to see how things were going. After a conference call, he loped up to the lift to meet [Bob] Wheaton, who’d delayed his retirement and signed on as a sort of roaming consultant for Alterra. They’re two unlikely ski bums turned even less likely ski executives. Wheaton, a native of Detroit, is short with a rancher’s belly. Gregory, who paid for his few finance courses by welding bridges, hulks with a linebacker’s head. On the lift ride up, they were sanguine about the future of their industry. Who wouldn’t love this? they wondered, as the sun saturated the Wasatch Range. ‘I can tell you one thing,’ Wheaton said, ‘we’re not done shopping, and Vail’s not either.’
Disembarking, the men tucked their chins to the wind, leaned into the descent, and carved sinuous turns with near-perfect form. In the parlance of the sport they love, they ripped, zipping past crowds of new guests at speeds that seemed almost reckless.”
*Pardon me for just a moment while I retch into the nearest trash receptacle.
Now I don’t blame Rusty for this soft serve story. It’s not like Rusty has to volunteer that reality may not exactly dovetail with the Horatio Alger, rags-to-riches narrative spoonfed to a reporter all too eager to lap it up.
This does lead me to ponder the nature of history itself. That if you want history told in a particular way, you’ve really got to control the narrative. It certainly helps if those around you are as invested in the narrative as you are. Better yet is when there isn’t anyone around you at all. Then you can tell it any way you want.
Over the past few years, Mammoth Lakes Tourism has boasted of record-setting month after record-setting month. Of TOT (room tax revenue) numbers soaring through the roof, increasing approximately 60% over two years between 2014-2015 and 2016-2017.
MLT Board members have told me that the numbers don’t lie, that they reflect what a great job the organization is doing to market the Town of Mammoth Lakes.
Further, the jump in tax revenue has largely coincided with the establishment of the TBID (Tourism Business Improvement District) in 2013, which literally tripled the Town’s marketing budget overnight.
The only conclusion that can possibly be drawn, therefore, is that the Director of Mammoth Lakes Tourism and the nine-member board have pressed all the right buttons and made all the right moves, and that the vast sums of money devoted to MLT’s marketing program should remain in place in perpetuity. Because if you’ve got a good thing going, you’ve got to keep all the numbers covered.
Just don’t roll seven.
But what happens when we trace financial history further back than five years?
What happens when we trace it back twenty years?
The answer may prove startling. What we find is that the compound growth rate from 1998-1999 through 2017-2018 is virtually identical to the compound growth rate from 2010-2011 (when Mr. Urdi took over as Executive Director of MLT) through 2017-2018.
Then, consider this. Below represents the Town’s total marketing budget as a percentage of room tax revenue.
1998-1999. $878,000 for revenue of $4.4M (20%)
2010-2011. $2.5M for revenue of $11.1M (22%)
2017-2018. $7.7M for revenue of $17.5M (44%)
By historical standards, the Town’s marketing budget should be about $4 million. Maybe $4.5 million if you really want to be aggressive.
Many Sheet readers are likely unfamiliar with the circumstances surrounding the formation of the TBID (the population around here turns over quickly), so let’s walk through a short history.
In the early 2000s, Mammoth Mountain CEO Rusty Gregory touted a plan to expand Mammoth Yosemite Airport and fly destination visitors in from Chicago and Dallas on 757s.
The environmental documents projected as many as 333,000 commercial air passengers flying into Mammoth each year.
There was just a small hitch. The Town of Mammoth Lakes had already signed a development agreement for the airport with a man by the name of Terry Ballas.
When the town (at the urging of Gregory) tried to dump Ballas in order to land millions in Federal Aviation Administration (FAA) airport improvement dollars (because the FAA found the competing plans incompatible), Ballas cried foul. He challenged the Town for backing out of the deal.
The Town subsequently got whipped in court. The damages: airport litigation cost the town $29 million (or $50 million over 23 years, factoring interest).
Gregory then told the town that the only way out is through. That the Town had to grow itself out of the mess.
The answer was to float a TBID.
And the only way to get a cynical town to raise fees to fund the TBID was by creating an independent, non-governmental organization (MLT) to market the town.
Initially, the TBID was supposed to raise $4.7 million annually. Below is what was advertised in a fact sheet distributed in 2013.
The Proposed Assessments:
Lodging (1%) $800,000
Retail (1.5%) $1.35M
Restaurants (1.5%) $750,000
MMSA (2% for lift tickets and ski school) $1.8M
Proposed Budget Distribution:
Marketing, sales, PR, promotional: $2.525M
Air subsidy $2M
During the debate over TBID, proponents trumpeted the fact that TBID assessments would be a “pass through” for the businesses. So you’re going to be assessed 1.5%? Well, raise your rates 1.5% then, they said. The consumer will pay for it.
The TBID went into effect in August, 2013. And literally overnight, Mammoth’s marketing budget tripled (TBID plus dedicated General Fund support for marketing).
TBID was renewed for another five years in 2018. It is still supposed to raise $4.5 million annually. The projected revised assessments look like this:
MMSA’s total has decreased as season passes are no longer part of the formula. Season passes are now sold out of Denver, and not subject to local levy.
TBID actual revenue for 2017-2018 was approximately $5.1 million.
The contribution to MLT from the Town’s General Fund was another $2.6 million.
I know. You’re wondering when I’m going to get to the point.
Here’s the point.
Regardless of how much credit one may give to marketing efforts over the past six years, the point is, revenue is up and businesses appear to be relatively healthy.
Mammoth Lakes Tourism is relatively healthy as well. A wonderful thing for those lucky enough to work for MLT either on a contract or full-time basis.
MLT Employee Labor Costs
2015-2016 $1.12 million
2016-2017 $1.23 million
2017-2018 $1.37 million
That’s a 22% increase in labor expense over a two-year span.
Okay, so how’s the average Mammoth Lakes resident doing. He/she has been paying TBID for the past six years – essentially bailing out the town for its airport fiasco. What is there to show for it?
Is there any new affordable housing stock? No. Rents have been skyrocketing. And rent is not a “pass-through” item. It’s not like you can make the mice pay it.
Is there a new amenity like an ice rink (with a roof on it), or a Performing Arts Center, or a National Wounded Warrior Center? Nope. We either can’t make those projects pencil, or are disinclined to help others bridge their funding gaps.
Are there more cops on the street? Nope. We’re about 25% below the police staffing levels of a decade ago.
Are the roads in better shape? Is the snow removal service better than it used to be? Have taxes been reduced? Are events better funded? How about the town’s recreation programs?
Tangibly, it seems like the only improvements we can really point to are the Main Street sidewalk, resurfaced tennis courts and half a fence at Sam’s Wood Site.
Not much of a return.
So again, I circle back a thousandth time to the Town of Mammoth Lakes allocation of resources.
There’s way too many resources going towards a burgeoning marketing bureaucracy at the expense of infrastructure and capital improvement.
And I’m tired of being a pariah for saying it. Questioning a single marketing dollar has been akin to questioning the flag itself. And it’s not personal, no matter how much Mr. Urdi wants to say it’s personal to otherwise distract people from an honest assessment of spending priorities.
We have to move past the tribalism. Because I think we’re literally throwing millions of dollars down the toilet every year which could otherwise be invested in … ourselves.
Allocating dollars differently wouldn’t infringe upon Mammoth’s competitiveness. It would enhance it.
Because we’d be spending more dollars on longer-range investment versus a short-term buzz.
Myself, I’ve decided that I’m literally for everything. I’m for the ice rink, no matter where Bill Sauser wants to build it. I’m for funding local people to create organic local events. It’s a damn sight better than sending every marketing dollar to the bottomless maw of Google and Facebook. I’m for more cops and better roads and for a performing arts center which could actually host world-class talent without embarrassment. I’m for us getting better. I’m for running out of excuses as to why we can’t get anything done. I’m for stopping the habit of doing something just because we did it before so we’re too scared not to do it and too afraid to fail at something new.
I’m for not waking up 25 years later wondering where the hell it all went and why there’s nothing to show for it.
“We know that bias prevents us from being a meritocracy, but research shows that when you say you’re a meritocracy, when you design an organization and you say that it is meritocratic, it leads to spikes in bias. It leads you to be more biased. Because basically, it frees people up from thinking that they have to try hard to be fair in their decision making.”
Founder and CEO, Paradigm
“Life in a tribe is easy, in all the wrong ways. You don’t have to think. Whatever the tribe thinks is right, whatever the other side thinks is wrong. There’s no real responsibility; just follow what the tribe and whoever speaks for it says to do.”
President, Purdue University